CINCINNATI - Kroger Co. here is expanding the distribution
of automated DVD rental kiosks from TNR Entertainment
Corp., Houston, in its stores to 1,300 locations across
the U.S., TNR reported.
The expansion will take automated DVD rental kiosks,
under the name The New Release, to 25 geographic markets
over the next six months and it is expected to be completed
by the first quarter of 2007.
"It has been our intention from the onset to roll
this business out nationally and we see it as a potentially
very big business," Richard Cohen, chief executive
officer of TNR Entertainment, told SN.
Shortly after TNR was founded in 2002, it deployed
in Kroger's Southwest region and, "based on that,
Kroger wanted to do a chainwide national rollout. They
put out a request for proposal to us and some ofour
competitors, and they picked us," Cohen said. "[Kroger]
was one of the principal places we wanted to take the
business."
Including machines from TNR and Redbox Automated Retail,
Oakbrook Terrace, Ill., Kroger has about 200 DVD rental
kiosks now and could have as many as 1,500 by the middle
of next year, according to industry observers. Kroger
did not respond to a request for comment.
DVD rental is very much alive, Cohen said. However,
it is not growing very rapidly and this means the economics
of the business are notas favorable to traditional video
rental stores as they once were. In its "2006 Annual
Report," the Entertainment Merchants Association,
Encino, Calif., cited numbers from Adams Media Research,
Carmel, Calif., showing that the $8 billion-plus rental
market declined about 4% last year.
"Those stores are having a hard time remaining
profitable, so someof them are closing, and that creates
a lot of unfulfilled demand," Cohen said. "That
demand has to go somewhere. One of the places it isgoing
is toward us."
Sixteen percent of consumers between the ages of 18
and 34 said they use self-service DVD rental machines,
according to a survey from WSL Strategic Retail, New
York, called "The Pulse: The Future of Self-Service
Vending Machines Is Yet to Come."
Twenty-six percent of the same age group said they
would use the machines in the future.
"The convergence of today's environment with social
expectations means we want to get anything we want,
when and where we want it," said Candace Corlett,
principal, WSL Strategic Retail, New York.
Corlett said the Internet, ATMs and 24-hour stores
all contribute to this consumer mind-set.
"I don't think our way of doing business [through
kiosks] will change the landscape of DVD rental radically,
but it will change it incrementally," Cohen said.
"I think other types of DVD rental will become
somewhat less important as we become more important."
Caption(s): A TNR DVD kiosk at a Kroger store.
LOAD-DATE: October 10, 2006
Copyright 2006 Gale Group, Inc.All Rights ReservedASAPCopyright
2006 Fairchild Publications, Inc.
Copyright 2006 Fairchild Publications, Inc.
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